VKontakte Investor to Keep CEO in Drive for $10 Billion Value
United Capital Partners is seeking to boost the value of Russia’s largest social network VKontakte to $10 billion within a decade after buying a 48 percent stake, the fund’s President Ilya Sherbovich told state television.
The Moscow-based fund bought the shares from co-founders Vyacheslav Mirilashvili and Lev Leviev earlier this month in a deal that may have valued the company at $2.2 billion, according to estimates by Forbes Russia. Billionaire Alisher Usmanov’s internet holding company Mail.ru Group Ltd (MAIL), which owns 40 percent of VKontakte, had also been seeking to gain control of the social network.
VKontakte is the world’s fastest-growing social network by number of users, Sherbovich told state-run television station Rossiya 24 yesterday. It has about 100 million registered users including almost 50 million people who use it every day. The company’s revenue per user is five times lower than Facebook and has potential to grow, he said.
The closing of the UCP deal comes as the Russian Investigative Committee seeks to question VKontakte Chief Executive Officer Pavel Durov regarding an April 5 incident in St. Petersburg when a policeman was struck down by an unknown driver in a Mercedes-Benz. UCP has no plans to dismiss Durov, Sherbovich told the television station. Mail.ru granted Durov the voting rights to its stake in VKontakte last May.
UCP plans to co-operate with shareholders including Mail.ru and Durov to develop VKontakte, Sherbovich said. UCP may consider taking the company public in five to six years after the social network proves its ability to boost earnings while retaining its user base, he said.
VKontakte increased sales 44 percent last year to $172 million, while net income attributable to shareholders fell 94 percent to about $1 million because of “considerable investments in the team and infrastructure”, according to data from the Mail.ru 2012 annual report.
To contact the reporter on this story: Ilya Khrennikov in Moscow at firstname.lastname@example.org